Why China, and not the US, is the leader in solar power

An employee at a solar panel production line of Shenzhou New Energy Co Ltd in Lianyungang, Jiangsu, China, March 15, 2018 [Reuters]

Solar power is one of the fastest growing industries in the world. According to the International Energy Agency (IEA), it accounts for almost two-thirds of net new power capacity globally.

In 2016, new solar capacity even overtook the net growth in coal, previously the biggest new source of power generation. The estimated value of solar power in 2015 was $86bn and is projected to hit $422bn by 2022. There's no reason to expect it to stop there and every reason to expect it to continue to grow.

Fossil fuels, including coal, oil and natural gas, are still the world's primary energy source. However, they have very high external costs - climate change, air and water pollution - and in the case of fracking - earthquakes.

These costs are rapidly increasing and people are becoming more aware of them. As a result, public demand for these costs to be counted - both through policy and litigation - is also increasing.

Moreover, the world has long been wary of the wars, threats of war and power plays that have come with oil dependency. All this was not much spoken of until recently because there seemed to be no real alternative to oil. But as renewable energy sources with minimal external costs become more practical and affordable, more people are moving towards using them.

There are several types of renewables - wind, hydroelectric, biomass, geothermal - but solar is by far the most effective one. Wind power is more technically demanding than solar. Hydropower usually requires damming rivers, which cause other complications.

It appears, at least for now, that solar is the future.

Invented in the US, manufactured in China

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The basis for most modern solar power systems is the silicon photovoltaic (PV) cell. It was invented in 1954 by three American scientists - Calvin Souther Fuller, Daryl Chapin and Gerald Pearson - at the Bell Labs in New Jersey.

Back then the PV cell had a very poor light-to-electricity conversion efficiency (around six percent) and was very expensive to fabricate. Over the next few years, Les Hoffman, another American scientist, improved its efficiency to 14 percent and lowered the production cost.

After that, it didn't take too long for solar to become one of the primary energy generation methods in space. In 1964 NASA launched the first Nimbus spacecraft, a satellite able to run entirely on a 470-watt solar array. Two years later, it launched the world's first Orbiting Astronomical Observatory, powered entirely by a one-kilowatt array.

To this day, US scientists are still leading the way in solar innovation. The most efficient solar cell technology yet, with a light-to-electricity conversion efficiency of 40.7 percent, was developed by the US Department of Energy and Spectrolab, a subsidiary of Boeing, in 2007.

Yet seven of the world's top 11 solar panel manufacturers are now in mainland China. Canadian Solar, one of the remaining four, is named for where it's headquartered but does most of its manufacturing in China. Chinese companies account for around 60 percent of total annual solar cell manufacturing capacity globally.

Why there and not in the US?

Policy.

China has deliberate, conscious, industrial development policies. They are modelled on the policies South Korea followed with great success in the 1960s and 70s.

In 1960, South Korea was one of the poorest nations in the world. Then the government launched a comprehensive and concrete industrial development strategy. It nationalised all commercial banks and reorganised the banking system to give itself control over credit. It focused on five key industries - steel, petrochemical, car industry, shipbuilding, and electronics - and provided low-nterest loans to businesses in these sectors according to the needs of economic plans. It also put on a drive to have the best technical education system in Asia.

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Thanks to these industrial policies, South Korea is now the 11th largest economy in the world.

Today, China is following South Korea's example and helping its solar industry to prosper as part of a long-term, well-thought-out industrial development strategy.

Picking winners and losers

In the US, however, Republicans who love to say "Government should not pick winners and losers!" are now in power. Mitt Romney said it. Paul Ryan said it. Donald Trump also said it. It's a gospel song at right-wing think tanks.

They don't mean it.

America is constantly "picking winners and losers". For example, it has special tax policies that allow the likes of Mitt Romney to pay a much lower percentage of their income in taxes than the average worker. There were special laws that allowed senators, congressmen and congresswomen, and their aides, to engage in insider trading.

When a law was passed to stop it, loopholes were added so that it wouldn't be too effective. When the crash of 2008 came, the US Treasury committed hundreds of billions of dollars to save the banks. The Federal Reserve put trillions of dollars into the hands of the very biggest banks. There was very little left for the rest who then entered the Great Recession. This is policy. It picks winners - the top 0.1 percent - and losers - the rest.

The tax policies and the bailouts also represent industrial policy. Perhaps better to call it, anti-industrial policy, because they both favour financialisation over manufacturing.

The US government gives immense support to defence industries. It works. A great deal of the country's technology edge comes from there. That also supports industries, like Boeing, who have one foot in the war machine and the other in the civilian world.

The United States is still a collection of states. They all compete to bring businesses with jobs. Even cities do. GM, Ford, Shell Oil, Caterpillar, BMW, Mercedes Benz, Microsoft, Airbus, Panasonic, Amazon, Google, Michelin, Sears, Dow are among the 48 companies the NY Times has listed in its $100 Million Club, having received that much or more in state grants since 2007.

What America is against is an articulated, thoughtful, deliberate industrial policy.

When Jimmy Carter was elected president, there was an oil crisis going on. He installed solar panels at the White House and asked for a billion dollar investment in solar power research. He was wrong that the world would soon run out of oil. But he was right that about one-third of America's trade deficit was in imported oil, that more wars would be fought for it and that the future was solar.

When Ronald Reagan came into office, he got rid of the solar panels. He returned policy to whoever had the most financial clout to buy it. There it has remained, for the most part, ever since.

The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial stance.